Saturday, July 7, 2012

BLACK HAWK MINING BULLETIN ARTICLES: AUS MINING CONTINUES GROWTH

A recent survey conducted in Australia shows that although their mining sector is enjoying a boom, services

sector is in an opposite condition. Most of the contraction was caused by a decline in new orders among the various players in the services sector while sales and prices also fell.

Just 2 out of 9 sub-sectors (namely, personal and recreational services and finance and insurance) included in the survey has grown during the month. The increased activity in the mining sector is not positively affecting the remaining sectors of the local market.

The chief executive of the Australian Industry Group (AI Group) said that the contraction in the services industry just shows how narrow is its base of development in the broad market.

Several stability in financial states abroad in a period of few months will be favorable for allowing consumer and business confidence to improve, resulting in a gradual increase in spending.

More than half of the world’s mining acquisitions in 2011 has involved projects located in US, Australia and

Canada. Other buyers include China, India, Russia and Brazil, all of which increased their acquisitions by 42% since 2006.

In terms of gold, the average deal is valued at USD 41 million where a premium is almost 50%. Propelling the lucrative market is Australia with 15%, United States with 14% and Canada with 49%.

Considering the bigger picture of the industry, PwC seems to be expecting that this year will see record M&A valuations and volumes in the mining sector worldwide.

According to the company, sovereign wealth funds tend to have more advantage in winning transactions because of their low cost of capital.

PwC is assuming that non-miners like sovereign wealth funds, large pension funds and private equity might reassess their approach to the industry and begin to participate more in M&A.